On Thursday, Jefferies adjusted its outlook on ConAgra shares (NYSE:CAG), reducing the price target to $26.00 from the previous $28.00, while maintaining a Hold rating on the stock. The adjustment follows ConAgra's second-quarter performance, which surpassed expectations. However, the company acknowledged a minor benefit from hurricane pantry loading and a shift in trade spend that may have contributed to the better-than-anticipated results.
Management at ConAgra announced a reduction in the fiscal year 2025 profit guidance, citing ongoing protein inflation as a key factor expected to impact margins. The company faces the challenge of maintaining promotional activities to stay competitive, which is particularly pressing given the continued strain on low-income consumers and the need to invest in pricing strategies.
The analyst from Jefferies highlighted that ConAgra is confronted with limited options to counterbalance the rising input costs. This situation is anticipated to exert prolonged pressure on the company's profit margins. The firm underscored the need for ConAgra to keep up promotional efforts in an environment where the consumer base is still recovering from economic difficulties.
ConAgra's stock performance and future prospects remain a focal point of interest for investors, especially in light of the updated financial guidance and market conditions described by Jefferies. The revised price target of $26.00 represents the firm's current valuation of ConAgra's stock based on the aforementioned factors.
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